Success Stories

Barry (Pre-Retiree)

Barry (not his real name) came to Family Wealth Advisory in 2011 aged 56 looking for someone to manage his superannuation assets.

Barry had $293,000 in superannuation assets in October 2011.

Barry’s initial wishes were to build passive retirement income by age 60.

Since then my firm has provided a superannuation contributions strategy to Barry in line with numerous legislative changes. We have contacted semi-annually to ensure Barry remains accountable to his plans.

Barry has a medium risk investment profile with 70% of his superannuation funds are invested in growth assets such as Australian & International shares and Property. The expected long term annual returns for this profile are 7.5% pa (net of fees).

During this time, Barry has been in and out of work due to his occupation being seasonal.

Barry has contributed on average $1,000 per month to superannuation since October 2011.

His current balance in super sits at $607,000 in October 2016. This represents a 9.5% return (net of fees) during that period of 5 years.

Barry has decided to continue working after the age of 60.

We work with Barry on a fixed fee for service offering each year which includes a full review of his current situation, updated goals and plans.

Our firm reviews his investment portfolios on a semi-annual basis and we provide support to Barry for any queries 365 days a year and in particular around Budget time.

Retirees

Most recently we had a retiree couple come to Family Wealth Advisory in 2016 looking for someone to give them advice on retirement planning.

An accountant had established a SMSF for them 5 years earlier and invested their funds in term deposits since that time. As interest rates fell over the period, they were digging into the nest egg to provide regular living needs and to fund holidays.

After receiving advice, the clients were able to increase their Age Pension entitlement by $7,000 per annum as well as establish three separate income streams.

An annuity (income stream) was used to guarantee income for a period of 15 years with a return of 5% per annum guaranteed for that time. In 15 years, the same client will have an option to withdraw 90% of the initial capital of that investment.

By using the annuity product, the client will also enjoy an Age Pension entitlement uplift each year as the value of the asset reduces the amount of assets for that purpose.

The combined income streams (3) including the annuity, as well as Age pension entitlements will see the client receive $52,000 per annum for living needs. This is in excess of their required amount and allows them to spend more on family, holidays or the home.

The following is a graphical example of the projected impact on retirement capital as a result. The orange columns represent advice portfolios vs current cash portfolios. The value of this advice over a 10-year period is estimated at $200,000.

Assumptions have been made in this illustration that should not be relied upon. These are projections only and are based on increased income from Age Pension and guaranteed income from the Lifetime annuity. You should contact our office on 02 9522 7380 to see how we may be able to assist you to meet your goals in a similar way.

Pre-Retiree – Specific Goal

Mary (not her real name) came to our offices in 2011 looking for a retirement plan. She had around $350,000 in financial assets including superannuation.

She had a plan to retire in 3 years and wanted to build assets to $500,000 by that time.

After identifying surplus cash flow upon completion of an annual budget, we highlighted a strategy to build retirement assets through superannuation.

By the time Mary had reached retirement at age 63, she had accumulated superannuation assets of $550,000 and had $50,000 in cash available for immediate retirement plans.

Mary has now been retired for a period for 3 years and lives on an annual income of $40,000 per annum supported by 2 income streams and some Age Pension entitlement.

Her retirement assets are valued at $520,000 including a Lifetime annuity that provides guaranteed income for 15 years of $8,000 pa to support current Age Pension entitlements and an allocated pension income stream. She also maintains cash available of $50,000 for short term needs.

The annuity will provide her with a guaranteed capital amount of $144,000 in 15 years and help increase Age Pension entitlements over that period.

Mary will be impacted by the upcoming Age Pension changes commencing 1st January 2017 and as such we have been outlining plans to manage income streams, cash flow and lump sum requirements for the last 12 months to reduce the impact.

We work with Mary on a fixed fee for service offering each year which includes a full review of her current situation, updated goals and plans.

Our firm reviews her investment portfolios on a semi-annual basis and we provide support to Mary for any queries 365 days a year and in particular around Budget time and when Centrelink legislation and Asset & Income Test changes occur.

Retiree increases Age Pension entitlements and saves Tax

Reginald and Louise (not their real names) came to Family Wealth Advisory in 2010. They were planning to retire in 2011 and were about to sell an investment property with a large capital gain.

The capital gain on sale of that investment property was $204,000. This meant that both Reginald & Louise had a further $102,000 each assessable income that year.

With CGT discounts they were up for a further $51,000 each of assessable income and tax payable of $20,000 each.

Our advice was to make super contributions at the time and then convert the superannuation assets into (2) income streams to support their living needs. This strategy also saved them $15,000 in tax each as they could maximise concessional contributions at the time.

They had planned to live on $30,000 pa from their superannuation assets.

After implanting our strategy, the client had $36,000 pa income from Age Pension and NZ Pension benefits as well as the 2 income streams. Their total retirement assets at that time were increased from $75,000 in super to $515,000 in super. This included a non-co0cnessional superannuation strategy before commencing an income stream.

At our latest review the clients super/pension assets were valued at $350,000 with a substantial payment of $150,000 used to help fund a RAD payment for Aged Care for Louise.

Their retirement capital has been preserved since 2011 by being invested in a 50% growth asset profile with the other 50% invested in cash and bond investments.

A low cost index fund strategy as well as strong returns during the period have provided annual returns of 7.5% to 8.5% in both portfolios.

We work with the client on a fixed fee for service offering each year which includes a full review of their current situation, updated goals and plans.

Our firm reviews their investment portfolios on a semi-annual basis and we provide support the client for any queries 365 days a year and in particular around Budget time and when Centrelink legislation and Asset & Income Test changes occur.